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Business confidence in Scotland fell again in July, survey finds

(Jane Barlow/PA)
(Jane Barlow/PA)

Business confidence in Scotland fell again in July, a bank has said, as firms’ optimism for the economy declined.

Confidence north of the border dropped 11 points during July to 16%, the latest Business Barometer from Bank of Scotland Commercial Banking said on Friday.

Overall UK business confidence dipped three points during the last month to 25%, with only four out of 11 nations and regions recording a higher reading than June.

Fraser Sime, regional director for Scotland at the bank, said: “Headwinds like rising costs and supply chain disruption are continuing to affect businesses across the UK, and it’s no different for firms here in Scotland.

“Whatever their sector, businesses need to remain resilient at this turbulent time to navigate the challenges ahead.”

Fraser Sime the regional director for Scotland at Bank of Scotland Commercial Banking
Fraser Sime, the regional director for Scotland at Bank of Scotland Commercial Banking (Bank of Scotland/PA)

The Business Barometer, which questions 1,200 firms monthly, provides early signals about economic trends in the country.

In Scotland companies reported lower confidence in their own business prospects month-on-month, down 17 points at 32%.  

When taken alongside their optimism in the economy, down six points to minus 1%, this gives a headline confidence reading of 16%. 

Despite the fall, Scottish firms identified their top target areas for growth in the next six months as diversifying into new markets, investing in new technology and evolving their offering.

A net balance of 5% of businesses in Scotland expect to increase staff levels over the next year, down 11 points on last month and the lowest of all UK nations and regions.

Hann-Ju Ho, senior economist at Lloyds Bank Commercial Banking, said: “Business confidence declined this month, suggesting that economic headwinds are becoming more forceful.

“Despite this, firms’ assessment of their own trading prospects showed some resilience in the face of a challenging environment.

“Meanwhile, price pressures have shown no clear signs of a downward trend and there appears little sign yet that wage pressures are abating.”

Business confidence dropped across all four sectors in July, reflecting lower optimism about the economy, according to the Business Barometer.

Confidence within manufacturing declined the most this month, the bank said, with firms citing moderating trading prospects and a notable drop in economic optimism, but also issues with inflation and supply bottlenecks.

The Bank of Scotland survey also found small falls in confidence for constriction, retail and services.